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Client Alert
Law to Promote and Regulate Remote Work by “out-of-state” Employers - Puerto Rico
By: Angel Berberena, Esq.
Edgardo Rodriguez, Esq.
January 22, 2024
On January 17, 2024, the Governor of Puerto Rico, Hon. Pedro R. Pierluisi, signed House of Representatives Bill 1745 into law (the Act). The Act promotes and regulates “out-of-state” employers to recruit or relocate employees to perform remote work in Puerto Rico.
Effective immediately, the employment agreement, and not Puerto Rico law, will dictate the employment rights, terms, and conditions of employees working remotely if:
- The employee is classified as an executive, administrator, or professional under the "Fair Labor Standards Act" and the regulations of the Department of Labor and Human Resources ("Exempt Employee").
- The Exempt Employee is domiciled in Puerto Rico.
- The employer is covered by the Act. (Covered Employers cannot be engaged in businesses in Puerto Rico or have an economic nexus with Puerto Rico).
- The Exempt Employee performs his work remotely.
The Act also exempts these employment relationships from most of Puerto Rico’s labor and employment laws. The Exempt Employees will still be covered by statutes governing workmens' compensation (Act 45-1935), non-occupational disability insurance (Act 139-1968), and chauffeurs' insurance (Act 428-1950) (when applicable), unless the Covered Employer provides the same or better coverage than what is required under Puerto Rico law. In addition, unemployment insurance (Act 74-1956) will also be applicable unless the Exempt Employee has coverage in another jurisdiction.
When the Exempt Employee is not domiciled in Puerto Rico, but decides to relocate and work remotely from Puerto Rico, the Covered Employer will be exempt from compliance with all local employment laws and statutory benefits until the Exempt Employee becomes domiciled.
Finally, although unrelated to remote work, the Act provides benefits to encourage airlines to establish operations in Puerto Rico. Specifically, the Act excludes airlines' unionized workers from Puerto Rico’s labor and employment laws.
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